Off The Wire

LIMA, June 12 (Reuters) - Southern Copper Corp said on Tuesday that it plans to start building its proposed $2.5 billion copper mine Michiquillay in Peru next year and will likely start operations in 2022 - three years earlier than previously forecast.

Southern’s chief executive, Oscar Gonzalez, added that the company will need to reach detailed agreements with residents near the deposit in the northern Andean region of Cajamarca before construction can begin.

Gonzalez estimated talks with communities would take a year and construction another three years.

“It’s expected operations will start by 2022,” Gonzalez told journalists after signing the Michiquillay contract with government officials. “Hopefully we can do that once communities and the Cajamarca region give social approval of the project.”

Southern, which is controlled by Grupo Mexico, said in late April that production at Michiquillay would likely begin in 2025. The proposed mine is expected to churn out 225,000 tonnes of copper per year for an initial mine life of more than 25 years.

Securing a so-called social license is one of the biggest hurdles to investing in Peru, the world’s No. 2 copper producer and home to dozens of disputes over natural resource extraction in poor provinces.

Southern’s $1.4 billion Tia Maria copper project in southern Peru has been on hold because of local opposition for years. Newmont Mining Corp shelved its proposed $4.8 billion gold-and-copper mine in Cajamarca after deadly protests in 2011.

Alberto Necco, the head of Peru’s investment promotion agency, Proinversion, said residents near Michiquillay were not opposed to mining but expected jobs, training and other benefits from the company, some of which were outlined in the contract.

Southern Copper won the public auction for Michiquillay in February by offering the government $400 million and a 3 percent royalty rate - beating out Compania Minera Milpo.

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